A LOGICAL RAIL BUDGET BUT WHAT ABOUT DEFUNCT WORK ETHOS OF INDIAN RAILWAYS?

Some headlines from the past hour on the Rail Budget 2016 are:

Rail Budget growth-oriented, but revenue target will be a challenge, says industry – Times of India
Rail Budget gets a thumbs down on D-Street for fourth consecutive time – Economic Times
Rail Budget 2016: PwC says investment to be a challenge for Railway amid flat traffic, high costs – Economic Times
Rail Budget 2016: Railway-related stocks fall up to 10% on Dalal Street – Business Today
Big proposals, no fare hike: How Suresh Prabhu avoided the bitter pill in Rail Budget 2016 – Firstpost
On Rail Budget day, Indian rupee hits new 30-month low at 68.72 vs US dollar – Financial Express

These are just few from the lot of analytical pieces written – taking sides based on the parameters taken into consideration – but overall, it is a mixed bag with the obvious question – that asks – how – a how that can unravel every good intention behind a Railway Budget that is otherwise logical and future oriented.

The Rail Budget 2016 started on a logical note – with no-nonsense announcements and proposals. In its initial run, as Suresh Prabhu, the Rail Minister started presenting it, it sounded the most logical Rail Budget in the recent times.

The budget began with more emphasis on improving passenger services and amenities this year – something long overdue – than announcing mindlessly new trains to appease votebanks – but in the end, it came out to be pretty ambitious – and that is the whole point behind raising questions – shadowing the positive senses.

The Rail Budget 2016 is passenger centric, policy change centric and future centric that also intends to be ‘work culture change’ centric. It, in fact, talks vehemently about it.

But given the sorry state of the affairs at Indian Railways, we need to be sceptical. In fact, we need cynical questions here.

Indian Railways is a mammoth organization employing maximum number of people in the world’s largest democracy and claiming a robust outreach network in almost every part of country barring the North-East. It is good that this strategically important last mile connectivity is now a priority of the government. And so, Indian Railways is the lifeline of the nation as the majority here still cannot afford air-travel.

But Indian Railways is a corrupt and defunct organization. Corruption, in fact, has percolated in every wing of its functioning – from tickets checkers or TTEs travelling in trains to booking clerks duping innocent people on ticket booking windows to its officials (in every hue) sitting in its zonal offices to its headquarters in Delhi.

And this corruption is vivid and variegated – from petty offences like TTEs illicitly pocketing money in trains to senior level officers cornering big convenience money in freight handling to big commission in projects.

Unless that culture is not corrected, any attempt to take Indian Railways on a futuristic journey of course correction is impossible.

So, whatever Mr. Suresh Prabhu intends to do with his reformative tools, with newly proposed three freight corridors, with no hike in passenger and freight fare to build on volume, with more and more use of technology in enabling Railways to act more passenger customer friendly, with ways to increase revenue, with plans to build infrastructure including private collaboration, we need to keep in mind that it is about mindset change – a mindset that travels through the floodgates of bribes and other modes of illicit money.

The chronic corruption that has infested every part and every appendage of the huge machinery that Indian Railways is.

A mindset change is a long and tedious process with no timeframe and with no guarantee of outcome. It may happen. It may not happen. It becomes even more complicated when the ‘mindset’ is shaped by corruption as is the case with Indian Railways.

And Mr. Suresh Prabhu is one of its most prime examples. He is very active on Twitter. In fact, his alertness on Twitter is an example for all other ministers to follow – but only as long as it pleases him. He doesn’t like to act on or respond to negative tweets.

©/IPR: Santosh Chaubey – https://santoshchaubey.wordpress.com/

THE BUZZ WORDS BEFORE THE RAIL BUDGET PRESENTATION

Railway’s financial health: Indian Railways is in dire financial straits. It barely earns to sustain itself when it needs huge funds to modernize its ailing and ageing infrastructure. The high operational ratio, with expenditure being the 90% of the earning, will be discussed with deliberations on ‘how the new Rail Minister will approach the problem’?

Tariff hike: Fares would be hiked or not? Will the freight tariff come down? Will the passenger fare go up? Will the subsidized segments of train fares see rationalization?

Cleanliness: With ‘Clean India’ campaign being one of the cornerstones of Narendra Modi’s policymaking, the Rail Budget is expected to focus heavily on revamping the image of Indian Railways, a limping behemoth where even the A-class stations have questionable cleanliness record or where the catering of even the A-class trains like Rajdhani or Shatabdi cannot be relied on.

Clean energy/Alternative energy: Extending the cleanliness campaign, another big emphasis of the Modi government is to increase the share of clean/green energy in India’s overall energy consumption to the global norms. Indian Railways being a major energy consuming outfit, the Rail Budget is expected to lay down vision on the same.

Water conservation: Open taps or leaking pipelines are a common feature of all stations. Also, huge amount of water is used in cleaning trains and stations and much of it is wasted. But there are no specific guidelines water usage. Water recycling is still not practiced by most of its wings. The budget is expected to come with plans for the same.

High speed corridors: The Rail Budget is expected to and should focus on the high speed corridors, preferably on introducing semi high-speed trains and increasing speed of the existing ones. India doesn’t need a Bullet Train corridor now. Burdening its economy with huge-investment white elephants like Bullet Train projects, the one between Mumbai and Ahmedabad is expected to cost Rs. 60,000 crore, should be avoided. And we can expect this from the pragmatic professional in Suresh Prabhu, the Rail Minister.

Freight v passenger tariff trade off: What Indian Railways earns through freight is used to absorb the loss made by its passenger segment – the story of cross subsidy. It stands now at Rs. 24,000 crore. Indian freight tariff is among the highest in the world while its passenger tariff for suburban and sleeper is among the lowest. It is sort of a double whammy. The cross subsidy is eating into Indian Railway’s financial health and the high freight subsidy is making it lose market share to the road transport operators. Balancing these is a tough task, given the sensitivity of electoral compulsions. It would be interesting to see how Mr. Prabhu reflects on the same.

Customer satisfaction: It is always the buzz word, improving on services and introducing amenities. Cleanliness, better booking options, cooking hygiene, cuisine quality, better options on trains, efficient information broadcasts, wi-fi expansion and so on. The fare dynamics is an important part of it. If the fares are increased, it will be to arrange the funds for better amenities. It the fare are not reduced, it will again be to meet the fund requirement to provide a better customer experience. And if the fare are reduced, what else can be said, it is always the most satisfying aspect for most of the customers.

Collaborations: Need to infused fund in Indian Railways and as the government cannot meet the requirement on its own, there should be collaborations on the card – within India, from abroad. Privatization is certainly a sensitive issue but collaborations with external agencies on PPP model can be practiced. Also, the state governments can be made partners in projects falling in their region.

Make in India: Make In India is prime minister Narendra Modi’s flagship manufacturing initiative for India, intending to make India a production hub. But given the poor financial condition of Indian Railways, it should not be expected that the Rail Budget would come with new projects to produce its requirements in the country that it is currently importing.

©/IPR: Santosh Chaubey–https://santoshchaubey.wordpress.com/

A MORE ‘IN-BETWEEN-THE-LINES’ RAILWAY BUDGET – THE WAY TO A POPULIST UNION BUDGET?

A more ‘in-between-the-lines’ rail budget only supports the notion that the Congress party is preparing for an early Lok Sabha election. Except politics of claims and counterclaims, there was nothing new in the maiden Railway Budget speech of Pawan Kumar Bansal.

After the recent hike in the passenger fares in January, no one was expecting yet another hike in the Lok Sabha election year.

But the government coffers, more than the ill-health of the Indian Railways, was on the radar of the makers of the Railway Budget 2013-14.

The UPA government needs billions in funds to fund its populist schemes to encash them in the upcoming general elections, which by the analysis of the political developments of the moment, are going to be held later this year.

(WHY, MORE THAN ANY OTHER PARTY, THE CONGRESS PARTY WOULD GO FOR A 2013 LOK SABHA ELECTION?)

http://severallyalone.blogspot.in/2013/02/why-more-than-any-other-party-congress.html

Indian Railways’ ill-financial health has been a matter of concern for sometime now and the sudden fare-hike in January was a well thought measure to address, at least, some elements of the financial decline.

The timing served two purposes in one go – financial and political. It gave the Indian Railways the much needed cushion of increased cash flows. It also saved the government from the protests of the political opposition if the hike was announced at the floor of the Parliament during the presentation of the Budget.

It also relieved the government as the increased cash flows would reduce the burden on the Union Budget 2013-14 that an ailing Indian Railways might have posed so that the government could spend more on its populist dole-outs.

But, mere increasing the passenger fares was not enough to address the issue. Indian Railways needs much more to improve and modernize its network and infrastructure. The whole world, and the obvious comparison with China’s large network of high-speed trains, is putting India in poor light.

But, when the primary concern was of survival, who was going to think of modernizing and competing at the level of most modern technological innovations in the rail transportation?

The need of survival asked for increased revenue or increased funding by the government. Now a government, hard-pressed for funds, and all out to collect funds to fund its populist measures in an election year, could not have afforded much.

The other way was increasing the sources of income. The only immediate option available was hiking the fares. But the present administrators of the Indian Railways with the outfit being the lifeline of the country directly affecting the life of almost every Indian, too, were not in a position to do so in an election year. That would sound too unpopulist. Isn’t it?

So, in order to sound populist and people-friendly, as well as to increase the options of revenue generation, the UPA government decided to take the back door.

Hiking passenger fares is a sensitive issue as it directly affects the consumers and may invite negative sentiments from the lower income groups – a gamble not to be taken in an election year.

The Indian politicians believe perceptions play a major role in the electoral battles. But, what if it is a do-or-die situation for the Indian Railways?

So, squeeze him (the common man/the voter) out indirectly. Let him be in the perception that the fares were not hiked again. As for the other price hikes, the UPA government believes (wrongly) that it would be able to sail over the troubled waters by launching its populist schemes.

By the time, the voter would come to realize these back-door games, the elections would already be over.

The Railway Budget has increased the ticket prices indirectly by increasing rates like reservation charges, Tatkal charges and fuel surcharges. As expected, the ‘sleeper class’ has been given the least hike, but the consumer here too, has been duped by the other indirect tariff hikes.

The real killer is the proposal to hike the freight charges as well as its linking with the fuel and energy price variations. So, be ready to pay more each time the diesel or power prices are raised.

Indian Railways, though has a relatively low share of freight, i.e., 20 per cent, around 32 per cent of the Kerosene, diesel and LPG is transported through the Railways.

As the fuel prices are now deregulated and market controlled, expect more of regular periodic hikes in prices of fuels and so of the dependent commodities, from foodgrains to consumer durables.

Periodic hike in the fuel prices would increase freight charges increasing prices of the commodities being transported through the Indian Railways. The increased rail freight rates would, in turn, further increase the fuel prices. That would, indeed, be a vicious circle for Manmohan’s ‘aam aadmi’.

But that is indirect and Mr. Bansal has followed one of his predecessors Lalu Yadav, who did many such back-door things, like Tatkal pricing or break-journey rules, to increase revenue figures, that ultimately, squeezed out the common passenger.

What Mr. Bansal has done goes one step ahead. He has not only squeezed the common passenger but has also pressed hard the common man, by introducing the measures that would not only increase the ticket prices, but would also cause price increases across the spectrum of commodities linked with fuel prices and rail transportation.

So, the Indian Railways would be able to manage better and the UPA government will have greater space to manipulate the resources towards the schemes like the direct transfer of cash subsidy or food security or farm debt waiver.

And don’t think much about many loud-mouth claims of new projects, new trains and new concepts – they are just written and spoken to be forgotten. There is no set deadline and timeline for their implementation. In fact, they are just used to decorate the dull and routine fallacies like this Railway Budget.

©/IPR: Santosh Chaubey – https://santoshchaubey.wordpress.com/